Correlation Between Scientific Games and PENN NATL
Can any of the company-specific risk be diversified away by investing in both Scientific Games and PENN NATL at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Scientific Games and PENN NATL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scientific Games and PENN NATL GAMING, you can compare the effects of market volatilities on Scientific Games and PENN NATL and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Scientific Games with a short position of PENN NATL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scientific Games and PENN NATL.
Diversification Opportunities for Scientific Games and PENN NATL
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Scientific and PENN is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Scientific Games and PENN NATL GAMING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN NATL GAMING and Scientific Games is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Scientific Games are associated (or correlated) with PENN NATL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENN NATL GAMING has no effect on the direction of Scientific Games i.e., Scientific Games and PENN NATL go up and down completely randomly.
Pair Corralation between Scientific Games and PENN NATL
Assuming the 90 days horizon Scientific Games is expected to generate 0.67 times more return on investment than PENN NATL. However, Scientific Games is 1.5 times less risky than PENN NATL. It trades about 0.05 of its potential returns per unit of risk. PENN NATL GAMING is currently generating about -0.02 per unit of risk. If you would invest 6,150 in Scientific Games on September 3, 2024 and sell it today you would earn a total of 2,950 from holding Scientific Games or generate 47.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scientific Games vs. PENN NATL GAMING
Performance |
| Timeline |
| Scientific Games |
| PENN NATL GAMING |
Scientific Games and PENN NATL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scientific Games and PENN NATL
The main advantage of trading using opposite Scientific Games and PENN NATL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scientific Games position performs unexpectedly, PENN NATL can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in PENN NATL will offset losses from the drop in PENN NATL's long position.| Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc |
| PENN NATL vs. NTG Nordic Transport | PENN NATL vs. ARISTOCRAT LEISURE | PENN NATL vs. PARKEN Sport Entertainment | PENN NATL vs. USWE SPORTS AB |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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